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on Islamic Finance |
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Issue of 2020‒08‒10
seven papers chosen by |
| By: | Sascha O. Becker (Monash University; University of Warwick); Jared Rubin (Chapman University); Ludger Woessmann (ifo Institute, University of Munich) |
| Abstract: | This chapter surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms—Judaism, Christianity, and Islam—and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the “long divergence†between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions. |
| Keywords: | Judaism; Christianity; Islam; Economic development; Education; Persecution;; Political Economy; Finance; Specialization; Trade |
| JEL: | Z12 N00 J15 I15 I25 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:20-22&r=all |
| By: | NEIFAR, MALIKA |
| Abstract: | This paper consider Turkish banks case study over the period 2005–2014. To distinguish between interest-free and conventional banks, we use two-sided t-test, Multi-dimension figures, regression comparison method and Dynamic Fixed Effect (DFE) model. The long run comparison analysis [based on t-test, on regression and on Multi-dimension figures] between interest-free banks (IBs) and conventional banks (CBs) of bank specific factors indicates that there are difference between Islamic and conventional banks behavior. Both first methods show that Interest-free banks are riskier, have higher liquidity and are more capitalized. Univariate analysis (t-test based Comparison) shows in addition that interest-free banks are less stable, but are more solvent. While regression based Comparison analysis show that IBs are more profitable. Multi-dimension figures comparisons analysis show that Post GFC 2008, Islamic Banks are less stable, more solvent, and more liquid than CBs. Large IBs outperform Small IBs in term of profitability. But in term of asset quality measured by NPL, LTD and LLR, Small IBs outperform Large IBs. Comparing CBs and IBs in DFE model, from GMM results, it is clear that there is no bilateral directional relationship between stability (Z-score) and profitability (ROA). Stability is significantly sensitive to the increase of profitability only for CBs, while Profitability is significantly sensitive to the increase of Z-score only for IBs. Post GFC, IBs are more stable while CBs are less profitable. Size has positive effect on profitability outcome for IBs. Depreciation of Turkish money and inflation have negative effect on CBs’ profitability. |
| Keywords: | Financial stability, Profitability, interest-free banking, GFC, GMM, Multi-dimension figures comparisons, PVAR, SURE, Dynamic Fixed Effect (DFE) model |
| JEL: | G01 G21 G28 G32 Z12 |
| Date: | 2020–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101376&r=all |
| By: | Anuar, Khairul; Masih, Mansur |
| Abstract: | Islamic finance has been rising rapidly as an alternative investment outlet since the subprime crisis. Although there are many papers on the determinants of conventional stock prices, there is relatively much less attention paid to the determinants of Shariah (Islamic) stock indices. This paper analyses the relationship between the major macroeconomic variables and the Shariah Stock Index. Malaysia is taken as a case study. This study examines the determinants of Shariah stock exchange and to what extent each variable influences the prices of the stocks. We use the standard time series method to analyse the data. The findings tend to indicate that inflation rate is the most leading macroeconomic variable followed by Shariah stock index. All other variables are led by them. That implies that inflation rate is the most important driver of Shariah stock |
| Keywords: | Islamic stock index, inflation rate, money supply, interest rate, exchange rate, Malaysia |
| JEL: | C22 C58 E44 G15 |
| Date: | 2018–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101248&r=all |
| By: | Samuel Bazzi (Boston University, CEPR, NBER); Masyhur Hilmy (Boston University); Benjamin Marx (Sciences Po and CEPR) |
| Abstract: | Public schooling systems are an essential feature of modern states. These systems often developed at the expense of religious schools, which undertook the bulk of education historically and still cater to large student populations worldwide. This paper examines how Indonesia’s long-standing Islamic school system responded to the construction of 61,000 public elementary schools in the mid-1970s. The policy was designed in part to foster nation building and to curb religious influence in society. We are the first to study the market response to these ideological objectives. Using novel data on Islamic school construction and curriculum, we identify both short-run effects on exposed cohorts as well as dynamic, long-run effects on education markets. While primary enrollment shifted towards state schools, religious education increased on net as Islamic secondary schools absorbed the increased demand for continued education. The Islamic sector not only entered new markets to compete with the state but also increased religious curriculum at newly created schools. Our results suggest that the Islamic sector response increased religiosity at the expense of a secular national identity. Overall, this ideological competition in education undermined the nation-building impacts of mass schooling. |
| Keywords: | Religion, Education, Nation Building, Islam, School Competition |
| JEL: | H52 I25 N45 P16 Z12 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-349&r=all |
| By: | NEIFAR, MALIKA |
| Abstract: | This paper consider Tunisian banks case study over the period 2005–2014. The long run comparison analysis based on t-test between interest-free banks (IFB) and conventional banks (CB) of bank specific factors indicates that there are difference between Islamic and conventional banks behavior. CB are found to be more stable, while IFB have better liquidity and are riskier than CB. In long run, It is found alo that 2011 Yesameen revolution has negative effect on CB stability and 2008 GFC has positive effect on IFB stability. This paper investigates also the short run stability question based on dynamic model for Z-score ratio of tunisian banks during the same period. The paper finds that the level of Z-score can be attributed to both macroeconomic conditions and banks’ specific factors. Z-score is found to respond in short term to macroeconomic conditions. Z-scores tends to increase when Interest rate (INTER) and Foreign Direct Investment (FDI) rise. While instability increase when Unemployment rises, Exchange rate depreciates, and Inflation is high. It is found alo that in short run, 2011 Yesameen revolution and 2008 GFC have a significant positive effect on tunisian bank stability. |
| Keywords: | Financial stability, Z-score, 2008 Global financial crisis (GFC), 2011 Yesameen tunisian revolution, Tunisia, Islamic bank (IB), conventional bank (CB), macroeconomic factors, and banks’ specific factors. |
| JEL: | E32 E44 G01 G21 G32 Z12 |
| Date: | 2020–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101029&r=all |
| By: | NEIFAR, MALIKA |
| Abstract: | This paper contributes to the empirical literature on interest-free finance by investigating the feature of interest-free and conventional banks in Turky and 6 MENA countries over the period 2005–2014. To distinguish between interest-free and conventional banks [in terms of Profitability, Liquidity, Credit and Insolvency risk, and Stability], we use two-sided t-test, linear regression model, Non linear Panel model (Random Logit and Pooled Probit), and Discriminant function analysis. Using a sample of 115 banks (80 conventional and 35 interest-free banks), univariate results based on t-test show that interest-free banks (IB) are, on average, less profitable, more liquid, less stable, and have higher credit risk but are more solvent, than their conventional peers (CB). We find also that the difference between the 2 banking types was significant pre and post the GFC. IB are more profitable Pre GFC and more solvent post GFC. Results from linear regression models show that the two types of banks may be differentiated in terms of, bank characteristic, Size, Cross countries, and Maket Share. Small IB are more profitable, more capitalized, and more stable than Small CB (with or without islamic window). From the Pooled Probit model (Random Logit) results, banks which have more liquidity, which are better capitalized, more solvent, and which are less stable (less stable), are more likely to be IB. We find also that there is no difference between pre and post the GFC. From Discriminant function analysis, AGE was the strongest predictor in discriminating the two types of banks while Z-score was the next in importance as a predictor. |
| Keywords: | Financial stability, Profitability, Liquidity, Credit and Insolvency risk, 6 MENA countries and Turky, interest-free banking, GFC ,Panel Non linear model (Logit, Probit), Univariate analysis, Linear regression |
| JEL: | G01 G21 G28 G32 Z12 |
| Date: | 2020–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101028&r=all |
| By: | NEIFAR, MALIKA |
| Abstract: | This paper contributes to the empirical literature on interest-free finance by investigating the feature of interest-free (IB) and conventional banks (CBs) in Quatar over the period 2005–2014. To distinguish between IBs and CBs, we use at first stage two-sided t-test. With univariate descriptive analysis, compaired to CBs, IBs are found to be riskier and less stable, but have a higher liquidity, and are more solvent. Then, multivariate regression based comparision say that IBs are found to be riskier, less liquid except for Large IBs, less solvent except large IBs, more capitalized, less profitable post GFC (except High share IBs), and more stable. At third stage, PVAR-X specifications analysis revealed that IBs are found to be more capitalized, less profitable, and less stable except Small IBs and Post GFC. It is the Small IBs wich are less solvent even post GFC while higher market share IBs are more solvent. |
| Keywords: | Quatar, Financial stability, Profitability, Liquidity, Credit and Insolvency risk, interest-free banking, small banks, high share banks, 2008 GFC, t-test, linear regression models, PVAR-X(1) specifications, GMM, SURE, 2LS |
| JEL: | G01 G21 G28 G32 Z12 |
| Date: | 2020–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101375&r=all |